Absolute Reports Fiscal 2018 First Quarter Financial Results

Enterprise Segment ACV Base Increases 12% Year-Over-Year

November 13, 2017 04:00 PM Eastern Standard Time

VANCOUVER, British Columbia--(BUSINESS WIRE)--Absolute®
(TSX: ABT), the new standard for endpoint visibility and control, today
announced financial results for the three months ended September 30,
2017. All dollar figures are unaudited and stated in U.S. dollars,
unless otherwise indicated.

“Our Q1 results were supported by strong growth in the North American
enterprise segment, demonstrating the continuing success of our focused
strategy and targeted investment and reflecting the value enterprise
customers are realizing from our technology,” said Geoff Haydon, Chief
Executive Officer, Absolute. “The Absolute 7 platform launch is
particularly significant for this segment, featuring our new Absolute
Reach offering, which empowers customers to customize and extend a
definitive endpoint visibility and control capability across their
entire endpoint populations. While these features were only deliverable
for the last couple of weeks of the quarter, early reactions have been
very positive from customers, prospects, and analysts."

Total revenue in Q1-F2018 was $23.0 million, representing a
year-over-year increase of 2%.

The Commercial Annual Contract Value (“ACV”) Base at September 30,
2017 was $88.5 million, an increase of 5% year-over-year and 1%
sequentially.

The enterprise portion of the ACV Base increased 12% year-over-year
and was up 3% sequentially, led by strength in the North American
enterprise segment. The public sector portion of the ACV Base
decreased 1% year-over-year and was down 2% sequentially, with the
decline being attributable to pricing pressure in the North American
education segment. Enterprise customers represented 50% of the
September 30, 2017 ACV Base, compared to 47% in the prior year.

Net ACV Retention from existing Absolute customers was 100% during
Q1-F2018, consistent with 100% in Q1-F2017.

Incremental ACV from New Customers was $0.8 million in Q1-F2018
compared to $1.0 million in Q1-F2017.

Adjusted EBITDA in Q1-F2018 was $1.3 million, or 6% of revenue,
compared to $1.9 million, or 8% of revenue, in Q1-F2017.

Cash generated from operating activities in Q1-F2018 was $2.1 million
compared to $1.9 million in Q1-F2017.

Absolute paid a quarterly dividend of CAD$0.08 per common share during
Q1-F2018.

Technology and Products

In mid-September 2017, we released the new Absolute 7 platform to our
customer base. This next generation version of our cloud-based
endpoint visibility and control platform features an intuitive
redesigned user interface, powerful endpoint hygiene automation, and
enhanced self-healing of third-party applications.

In conjunction with the Absolute 7 release, we debuted Absolute Reach,
which provides critical endpoint security automation to assess and
control an entire endpoint population—on and off the corporate
network. Absolute customers now have the ability to execute custom
queries and remediation to speed and streamline the detection and
remediation of security vulnerabilities and incidents.

Summary of Key Financial Metrics

USD Millions, except per share data

Q1

F2018

F2017

Change

Revenue

Commercial recurring(1)

$

21.8

$

20.8

5

%

Other

1.2

1.7

(27

%)

Total

$

23.0

$

22.5

2

%

Adjusted EBITDA(2)

$

1.3

$

1.9

(32

%)

As a percentage of revenue

6

%

8

%

Net (Loss) Income

$

(0.1

)

(0.8

)

82

%

Per share (basic)

$

(0.00

)

$

(0.02

)

Per share (diluted)

$

(0.00

)

$

(0.02

)

Cash from operating activities

$

2.1

$

1.9

10

%

Dividends paid

$

2.5

$

2.4

3

%

Per share (CAD)

$

0.08

$

0.08

Cash, equivalents and investments

$

32.8

$

43.0

(24

%)

Total assets

$

94.0

$

101.7

(8

%)

Deferred revenue

$

136.6

$

135.2

1

%

Common shares outstanding

39.9

39.0

2

%

NOTES:1. Commercial recurring revenue represents revenue
derived from term licenses and recurring managed services, both of which
are included as part of our Commercial ACV Base. Other revenue
represents revenue derived from professional services and ancillary
product lines, including consumer products.2. Throughout this
press release, “Adjusted EBITDA” is used as a profitability measure.
Please refer to the “Non-IFRS Measures and Definitions” section of this
press release for further discussion on these measures.

Corporate Outlook

The company has revised its outlook for F2018 based on Q1 results and
observed trends, including continued pipeline growth in the Enterprise
vertical but recognizing longer sales cycles and weaker than expected
performance in the public sector:

The Company is lowering its revenue guidance to between $94.0 million
and $96.0 million, representing 3% to 5% annual revenue growth.

The Company is maintaining its Adjusted EBITDA guidance of 9% to 11%
of revenue.

The Company is lowering its guidance for cash from operating
activities to 9% to 12% of revenue.

Capital expenditures remain unchanged at $3.0 million to $3.5 million.

Quarterly DividendOn October 20, 2017, the Company declared
a quarterly dividend of CAD$0.08 per share on its common shares, payable
in cash on November 27, 2017 to shareholders of record at the close of
business on November 6, 2017.

Quarterly FilingsManagement’s Discussion and Analysis
(“MD&A”) and Interim Condensed Consolidated Financial Statements and the
notes thereto for the fiscal quarter ended September 30, 2017 can be
obtained today from Absolute’s corporate website at www.absolute.com.
The documents will also be available at www.sedar.com.

Notice of Conference CallAbsolute will hold a conference
call to discuss the Company’s Q1-F2018 results on Monday, November 13,
2017 at 5:00 p.m. ET. All interested parties can join the call by
dialing 647-427-7450, or 1-888-231-8191. Please dial-in 15 minutes prior
to the call to secure a line. The conference call will be archived for
replay until Monday, November 20, 2017 at midnight ET. To access the
archived conference call, please dial 416-849-0833 or 1-855-859-2056 and
enter the reservation code 9896039.

A live audio webcast of the conference call will be available at www.absolute.com
and http://bit.ly/2yObYq9.
Please connect at least 15 minutes prior to the conference call to
ensure adequate time for any software download that may be required to
join the webcast. An archived replay of the webcast will be available on
the Company’s website for 90 days.

Non-IFRS Measures and DefinitionsThroughout this press
release, the Company refers to a number of measures which the Company
believes are meaningful in the assessment of the Company’s performance.
All these metrics are non-standard measures under International
Financial Reporting Standards (“IFRS”), and are unlikely to be
comparable to similarly titled measures reported by other companies.
Readers are cautioned that the disclosure of these items is meant to add
to, and not replace, the discussion of financial results or cash flows
from operations as determined in accordance with IFRS. For a discussion
of the purpose of these non-IFRS measures, please refer to the Company’s
September 30, 2017 MD&A on SEDAR at www.SEDAR.com.

These measures, as well as their method of calculation or reconciliation
to IFRS measures, are as follows:

1) Commercial ACV Base, Net ACV Retention, and ACV from New CustomersAs
the majority of the Company’s customer contracts are sold under
multi-year term licenses, there is a significant lag between the timing
of the Billing and the associated revenue recognition. As a result, the
Company focuses on the aggregate annualized value of its subscriptions
under contract, measured by Annual Contract Value (“ACV”), as an
indicator of its future revenues.

Commercial ACV Base measures the amount of recurring annual revenue
Absolute will receive from its commercial customers under contract at a
point in time, and therefore is an indicator of the Company’s future
revenue streams. Net ACV Retention measures the percentage increase or
decrease in the Commercial ACV Base at the end of a period for the
customers that comprised the Commercial ACV Base at the beginning of the
same period. This metric provides insight into the effectiveness of
Absolute’s customer retention and expansion functions. ACV from New
Customers measures the addition to the Commercial ACV base from sales to
new commercial DDS customers during the quarter.

We believe that increases in the amount of ACV from New Customers, and
improvement in the Company’s Net ACV Retention, will grow our Commercial
ACV Base and, in turn, our future revenues.

2) Adjusted EBITDAManagement believes that analyzing
operating results exclusive of significant non-cash items or items not
controllable in the period provides a useful measure of the Company’s
performance. The term Adjusted EBITDA refers to earnings before
deducting interest and investment gains (losses), income taxes,
amortization of acquired intangible assets and property and equipment,
foreign exchange gain or loss, share-based compensation, and
restructuring and reorganization charges and post-retirement benefits.
The items excluded in the determination of Adjusted EBITDA are
share-based compensation, amortization of acquired intangibles,
amortization of property and equipment, and restructuring and
reorganization charges and certain post-retirement benefits.

3) Adjusted Operating ExpensesA number of significant
non-cash or non-recurring expenses are reported in the Company’s Cost of
Revenue and Operating Expenses. Management believes that analyzing these
expenses exclusive of these non-cash or non-recurring items provides a
useful measure of the cash invested in the operations of its
business. The items excluded in the determination of Adjusted Operating
Expenses are share-based compensation, amortization of acquired
intangible assets, amortization of property and equipment, and
restructuring and reorganization charges and certain post-retirement
benefits. For a description of the reasons these items are adjusted,
please refer to the “Non-IFRS Measures” section of the September 30,
2017 MD&A.

About AbsoluteAbsolute is the new standard for endpoint
visibility and control, delivering self-healing endpoint security and
always-connected IT asset management to protect devices, data,
applications and users — on and off the network. Bridging the gap
between security and IT operations, only Absolute gives enterprises
visibility they can act on to protect every endpoint, remediate
vulnerabilities, and ensure compliance in the face of insider and
external threats. Absolute’s patented Persistence technology is already
embedded in the firmware of more than one billion PC and mobile devices
and trusted by over 15,000 customers worldwide.

Forward-Looking Statements

This press release contains forward-looking statements and financial
outlook that involve risks and uncertainties. These forward-looking
statements and financial outlook relate to, among other things, the
expected performance, functionality and availability of the Company’s
services and products, and other expectations, intentions and plans
contained in this press release that are not historical facts. When used
in this press release, the words "plan," "expect," "believe," and
similar expressions generally identify forward-looking statements. These
statements reflect the Company’s current expectations. They are subject
to a number of risks and uncertainties, including, but not limited to,
changes in technology and general market conditions. In light of the
many risks and uncertainties readers of the press release should
understand that Absolute cannot assure them that the forward-looking
statements and financial outlook contained in this press release will be
realized. Furthermore, the forward-looking statements and financial
outlook contained in this press release are made as at the date hereof
and the Company does not undertake any obligation to update publicly or
to revise any of the included forward-looking statements and financial
outlook, whether as a result of new information, future events or
otherwise, except as may be required by applicable securities laws.